Assignment 1 Essay

University of Arizona Accounting 554 Case #1: Dow Chemical Company Goals: • • • Become familiar with a set of financial statements including auditor opinion and significant accounting policy footnote, Perform basic analysis and interpretation of the financial statements, including common size analysis, Recognize the role of estimates in the measurement of financial statement amounts.

Elder, A. A., Beasley, M., & Elder, R. J. (2014). Auditing and assurance services (15th ed.). Upper Saddle River, NJ: Pearson.

Oceanview Marines firm has no financial, employment or family relationships with Lilts Berger & Associates that would impair the independence of the auditing services to be provided. Audit firm is an independent authority from the company as disclose in Client’s Acceptance Form. (Para 27 (b), PES 3(Amended), pg. 12).

The audit team documented its observations and quantified the resulting misstatements. Their audit paperwork classified Waste Management, Inc. as a “high risk client” partially due to the misstatements on its books, but also because of Buntrock and his team making “geographic” adjustments in the last quarter of the year to force the financial statements to meet previously stated profit expectations. Each year the auditing team presented Waste Management with “Proposed Adjusting Journal Entries” to bring the statements into compliance with GAAP. Waste Management refused to make the adjustments, yet Arthur Andersen still issued the statements with an unqualified opinion.

An American call option gives one the right, but not an obligation, to buy a specified number of shares of a stock for a specified price called exercise or strike price before the maturity date or on

The Office of Audits major contributors to this report are Paige Hamrick, Director; David B. Fox, Audit Manager; Rodney Johnson, Auditor-in-Charge; Douglas Denson, Auditor; Joshua Welborn, Auditor; Evette Fontana, Auditor; Corneliu Buzesan, Independent Reference Reviewer, and NAME, Communications Analyst.

Please sign the copy of this letter in the space provided and return it to us if the preceding is in accordance with your understanding.

As a firm, we have an uncompromising dedication to quality and excellence in everything we undertake. We participate in the American Institute of Certified Public Accountants (AICPA) Peer Review Program, which covers our audit and accounting practices. This program requires our Firm undergo an examination of our quality control policies and procedures every three years by an independent public accounting firm. Because of our dedication to quality, we have selected a premier peer review firm for this evaluation and have received “pass without deficiency” (the highest achievable rating) on each of our examinations including the review completed earlier this year. See Appendix A for a copy of the most recent Peer Review Letter.

 Audit Process 2-3 Chapter 02 - Financial Reporting and Analysis   Generally Accepted Auditing Standards Auditing Procedures Audit Report Types of Audit Qualifications ―Except for‖ Qualification Adverse Opinion Disclaimer of Opinion Analysis Implications from Auditing Analysis Implications of the Audit Process Audit Risk and Its Implications Analysis Implications of Auditing Standards Analysis Implications of Auditor Opinions Analysis Implications of Explanatory Language for Uncertainties Analysis Implications of the SEC Appendix 2B: Earnings Quality  Determinants of Earnings Quality Accounting Principles  Income Statement Analysis of Earnings Quality Analysis of Maintenance and Repairs Analysis of Advertising Analysis of Research and Development

The Lakeside Company: Auditing Cases, 12th edition, has been updated in light of the accounting

First, analyzing the Income Statement for Marion Boats, Inc. led Darby Consulting to a gross profit of $27,400 after considering the company’s trade-in allowances, cash, account receivables, loss on sales, and cost of goods sold. The loss on sales is not meant to be a red flag, it accounts for the loss on the resale of trade-in boats which is accounted for in the sales section of the income statement because it is a cost of doing business for the company. The firm considered the accounting principle six when preparing this document because it is important to recognize revenue as it is earned rather than when it is received (Young, 2013). This would take into account the fact that sales, both used and new, are accounted for when they are delivered to customers. The Darby Consulting then subtracted the five-month salary received by Fred, the legal expenses, Fred’s sales commission, and the loan interest to determine Marion Boats, Inc.’s $13,920 profit. The Income Statement was created using the seventh generally accepted accounting principles meaning that Darby Consulting was able to determine the expenses incurred by Marion Boats during a revenue period (Young, 2013). The Income Statement prepared by Darby Consulting looked similar to that of Mr. Hurley except that Darby Consulting broke down the sales section in an effort to better represent where revenue was received from.

Riggers Inc (“Riggers, “client, or “Company”) is audited by Stone LLC CPA firm (“Stone” or “auditor”). The Compa” ” ny builds and owns offshore drilling rigs. Riggers is a US-based corporation that recently expanded its operations into Brazil (the only foreign-based operations for Riggers). As a result of this expansion, the client has encountered two complex issues related to accounting for income taxes. During the 2012 year-end audit, the auditors must use professional judgment with regard to these two income tax accounting issues. The first issue relates to

Deresky, Helen (2014). International management: managing across borders and cultures. (8th ed.) Boston, MA: Pearson

Ocean wants to hire your firm to issue an opinion on its December 31, 2011 financial

AUDIT OF: DATE OF AUDIT: MAY 11, 2012 AUDITORS: Audit Participants: |Name |Position | | |Branch Manager | | |Assistant Manager | | |Sales Representative | | |Sales/Purchasing/OH&S